Franklin Jae M.

Berdin 2nd year, Block-A Labor Law I

UST Faculty Union v. NLRC
G.R. No. 90445

Facts:

The controversy, from which the case arose, has to do with the payment of the 13th month pay. UST and its employees agreed
that employer has to pay Christmas gifts of P2,000.00 for full-time faculty members and P1,000.00 for part-time faculty
members. Further, employer was also required by law (P.D. 851 as amended) to pay its faculty members the 13 th month pay.
However, said faculty members expressed their apprehensions regarding reports "that the 13th month pay is being reduced by
deducting therefrom the amount of the said Christmas gift.

Employer replied attaching a memorandum of its legal counsel which concluded that the Christmas bonus already paid to the
employees shall be credited as compliance with the 13th month pay.

Consequently, employees’ union filed a complaint to compel UST to pay the faculty members the full amount of their 13th
month pay and not to deduct therefrom the P2,000.00 or P1,000.00 given as Christmas gift.

Unfortunately, the Labor Arbiter ruled that the Christmas gift may be considered an equivalent of the 13th month pay pursuant
to the rules implementing P.D. No. 851

Issue:

Whether employees already enjoying the equivalent of 13 th month pay in the form of “Christmas Gift”, is precluded from the
grant of 13th month pay benefit.

Held:

NO. While the law does permit the nonpayment of an employer of the 13 th month pay of its employees if it already pays a
benefit equivalent to the amount of 13 th month pay in order to prevent double burden, the term “equivalent” is defined by law
(P.D. 851) as to not include “Christmas Gift”. Although P.D. 851 permits “Christmas Bonus” as a valid equivalent to the 13 th
month pay, it is entirely different from “Christmas Gift”. The resolution of the case is more specifically discussed as follows:

The leading case on the 13th month pay is National Federation of Sugar Workers (NFSW) v. Ovejera. The leading case
concluded that "Christmas bonus," "milling bonus" and "amelioration bonus," the yearly total of which exceeds one month
salary, may be considered as an "equivalent" of the 13th month pay under the rules implementing P.D. No. 851.

Further, it stated that the intention of the law was to grant an additional income in the form of a 13th month pay to employees
not already receiving the same. It was not envisioned that a double burden would be imposed on the employer already paying
his employees a 13th month pay or its equivalent. Otherwise, what was conceived to be a 13th month salary would in effect
become a 14th or possibly 15th month pay. The IRR of P.D. 851 itself states that term "its equivalent" . . . shall include
Christmas bonus.

HOWEVER, the imposition of a "double burden" does not obtain in the present case even if UST pays both the 13th month pay
and the Christmas gift of P2,000.00 or P1,000.00. The Christmas gift is part of the lump sum of P35M which the school has
obliged itself to pay the faculty members in full settlement of their share in the increase of tuition fees pursuant to P.D. No. 451.
It is not a bonus, incentive or additional income. Neither is the giving of the Christmas gift an act of liberality on the part of the
university. The Christmas gift was partial payment, according to a schedule agreed upon by UST and the faculty union, of the
university's outstanding obligation to the faculty members for their share in the increase in tuition fees under P .D. No. 451.
Once the university has fully paid the P35M to the faculty members within the time frame and in the forms specified in the
agreement, its obligation to pay a Christmas gift of P2,000.00 or P1,000.00, as part of the P35M compromise package, ceases.
UST would then have to comply only with P.D. No. 851 as amended by Memorandum Order No. 28 by paying the 13th month
pay.

The Christmas gift is clearly not an "equivalent" of the 13th month pay under the rules implementing P.D. No. 851. It is not
akin to a "Christmas bonus," "mid-year bonus," "profit-sharing payments" or "other cash bonuses." The Christmas gift cannot
therefore be compared to the "Christmas bonus," "milling bonus," and "amelioration bonus" which are actually forms of
incentives and additional income for the employees.
Franklin Jae M. Berdin 2nd year, Block-A Labor Law I
We are not saying that the leading case of National Federation of Sugar Workers (NFSW) v. Ovejera is no longer good law.
What we are saying is that the facts and circumstances in the case now before us are at variance with those in the aforesaid case
and, hence, do not call for a disposition similar to that in said case.